LIC Nomura MF keen on acquisitions to fuel growth
Mumbai: LIC Nomura Mutual Fund, the MF arm of the nation's largest financial entity, may look at inorganic growth route to emerge as a major player in the cluttered industry that has been bleeding for years due to falling margins and flight of investors.
"We are not averse to mergers and acquisitions. If we get a right fit at right valuation, we will be definitely looking at such an option. This can give us a quantum jump in our Assets Uunder Management (AUM) apart from adding new investors," LIC Nomura Mutual Fund Chief Executive Nilesh Sathe said.
He, however, said the fund house doesn't have any enterprise value in mind, but added its promoters--insurance behemoth LIC and Japanese partner Nomura--will be supportive of such moves.
There are 46 mutual fund companies operating currently in the country and some analysts are of the opinion that consolidation should happen for higher growth in the wake of recurring losses incurred by them due to falling margins.
Last fiscal, only 20 fund houses reported profits with margins for the industry falling to 15 basis points (0.15 percent) during this period against 21 basis points a year ago.
Asked whether any proposal is currently under consideration, Sathe replied in the negative. "We are not looking at anything at this point of time," he said, adding that the majority partner LIC wants its subsidiary to move up in the pecking order by 2016.
Referring to some of the proposed scheme launches, Sathe said the company is awaiting approval for launching a mid-cap fund and will soon launch a capital protection fund.
Sathe also said the fund house is focusing more on the retail investors with a target of adding around 4,000 folios per month under the SIP (systematic investment plan) route.
LIC Nomura Mutual Fund, which had an average AUM of Rs 7,976 crore as of the September quarter, is a tie-up between insurance major LIC and Japanese financial major Nomura. LIC holds 65 percent in the joint venture.